Sept. 30 (Bloomberg) -- Nigerian President Goodluck
Jonathan handed control 14 former state-owned power companies to
new owners including Siemens AG, Korea Electric Power Corp. and
Transnational Corp., marking the start of a market-driven
electricity industry in the West African nation.

Share certificates and licenses were given to investors and
companies that had completed payments for stakes in power
utilities offered for sale. Investors paid more than $2.5
billion for 60 percent interest in the companies, the Abuja-based Bureau of Public Enterprises, the privatization agency,
said today.

“Today’s ceremony is indeed a major step forward in our
concerted efforts to ensure efficiency, competitiveness and best
best practices in the country’s electricity sector,” Jonathan
said at the transfer ceremony in Abuja, the capital. “We do not
expect the sector to be revitalized overnight, but we can all
look forward to a better time very soon.”

Blackouts are a daily occurrence in Nigeria, Africa’s most
populous country with more than 160 million people. Electricity
demand is almost double the supply of about 4,000 megawatts. The
government sold majority stakes in the former state-owned
monopoly, Power Holding Co. of Nigeria, to private investors
that acquired as much as 60 percent holdings in the power-generation and distribution companies spun out of the former
utility.

Tax Break

The government requires the new owners to add 5,000
megawatts to the national grid in five years. Incentives
provided include a five-year tax break, a partial-risk guarantee
backed by the World Bank, and a new electricity pricing system
that allows for a progressive increase in tariffs. State-owned
Nigeria Bulk Electricity Trading Co. was created and capitalized
with more than $750 million to serve as a clearing house between
power producers and distributors.

“The key thing is the exit of the government from the
provision of electricity services; government’s monopoly is
inefficient,” Ayo Teriba, chief executive officer of Economic
Associates Ltd., a Lagos-based consultancy, said by phone today.
“When you leave private investors to run the power sector
without interference, demand will meet supply.”

Nigeria plans to boost electricity output to 20,000
megawatts by 2016, and with the impetus from private investors
reach 40,000 megawatts by 2020. The country will spend about $5
billion in the next five years to improve its transmission grid,
according to the Power Minister Chinedu Nebo.